Dubai: Discussants on Islamic finance at the ongoing SIBOS 2013 agreed that to be a truly global alternative, there is a need for it to be rebranded to appeal to a wider section of banking and financial customers worldwide.

Can Islamic finance be international the way it is positioned and run today, asked Rushdi Siddiqui, co-founder and managing director of private equity firm Azka Capital, and he answered himself in the negative.

While it works well in Muslim countries, though he pointed out that even there, some people of faith who believe it is not pure enough.

The alternative, he suggested during the discussion on Monday, lies in the way Turkey has positioned it, calling it “participation banking”, which is “what the essence of Islamic finance is”. For example, he said, “when you have got not a borrower but a provider of capital working with an entrepreneur, there is a risk and that risk is being a participatory transaction. Therefore you want to do the due diligence in that transaction.”

In a country like India, with a large Muslim population, Siddiqui said that a term such as participation banking will have a wider appeal than Islamic finance. “You can cross sell Islamic finance because the substance of it resonates to people who understands finance,” he noted. Puan Norashikin Mohamed Kassim, director of Treasury at Bank Islam, Malaysia, believes that there is merit to rebranding Islamic finance. Today in Malaysia, it appeals to not just Muslims but a substantial part of the non-Muslim population as well. “There is need to rebrand simply because it is not targeted to just Muslims but it is targeted to those who believe in the concept of Islamic financing,” she said. “You do not have to be Muslim to be a customer of Islamic finance as long as you believe that the concept of underlying the Sharia fits with your view then you will have customers.”

Michael Bennett, head of derivatives and structured finance at World Bank, pointed to the use of Arabic words in English in Islamic finance and said whether they pose a hindrance or not to the market is an interesting question worth pursuing. “If your portfolio manager, for instance, in a conventional institution is thinking about purchasing say a sukuk, which is the Islamic equivalent to a conventional bond, not only do you have to get comfortable with that instrument, you have to convince your accounting department, you operations team, your lawyer.”
Bennett added that though all the terms can be easily translated — whether that creates a kind of shock to the people in the conventional field who are used to terms like lease, participation, profit and not used to terms like sukuk, ijara, murabaha and whether that is actually a hindrance to the market needs to be looked into in the efforts to widen its appeal.

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Al-Baqarah, 2:275

Those who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness. That is because they say: "Trade is like usury," but God hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for God (to judge); but those who repeat (The offence) are companions of the Fire: They will abide therein (for ever).